Abstract
The Nigerian economy relies on sale of crude oil for much of its revenue and foreign exchange; and like most
mono-product economy, it is highly vulnerable to global economic shocks. Dwindling income due to persistent
fall in the price of crude oil has forced the country to look towards agriculture and industry for more revenue. In
this regard, the pharmaceutical sector has high potentials but broad indices of performance for the sector
indicate poor performance. Researchers and the government agree that the general environment of business
particularly the political environment is responsible for the poor performance. This study, acknowledging that the
business environment is broader than the general environment focuses on the industry environment and seeks to
determine how industry structure and firm size affect the performance of firms in the Nigerian pharmaceutical
sector. Specifically, it seeks to analyze the balance of competition in the pharmaceutical sector with a view to
determining its impact on the performance of Nigerian pharmaceutical firms and establishing the nature of the
relationship existing between organizational size and organizational performance. It further establishes the
implication on the performance of Nigerian pharmaceutical firms and determines the implications of
organizational size on the innovation capability of Nigerian pharmaceutical firms. Relevant literature on the topic
was reviewed to provide, among other things, a structure for analysis and assessment. The study employed and
relied exclusively on secondary data. Quantitative and qualitative analysis was applied to the data collected and
the results of the analyses show that the Nigerian pharmaceutical sector is monopolistic competition in nature
and is characterized by a very high level of competition; particularly from substitutes and consequently, the profit
expectation for the sector is low. The study concludes that there is a strong positive relationship between firm
size and firm performance in the Nigerian pharmaceutical industry, implying that the bigger the size of a
pharmaceutical firm, the better its performance. Therefore, the Nigerian pharmaceutical sector is not an ideal
sector for small firms. These firms by virtue of their small sizes cannot mobilize the huge amount of resources
required for research and development, therefore cannot perform effectively and successful in the competitive
global marketplace. On the basis of these findings, the study determines that the nature of the industry in which
the pharmaceutical firms operate and their (small) sizes impact negatively on their performances and results. The
study recommends that the government of Nigeria should establish some minimum requirements in terms of
resources for firms in the sector taking cognizance of global trends. Additionally, Nigerian pharmaceutical firms
should seek for opportunities to collaborate with producers, distributors, and sellers of alternative medicine
(herbal remedies) that are currently competing with them. Finally, until firms in the Nigerian pharmaceutical
sector become large enough to engage in research and development independently and successfully, they should
consider joint venture initiatives in research and development.